Ganesh Vasudeva Shet Vs ITO (ITAT Bangalore)
Section 44AA- Agriculturist Not Bound to Maintain Books – Agricultural Income Cannot Be Treated as Unexplained Where Sales Are Substantiated- Adhoc Expense Disallowance Without Evidence Not Sustainable
Agricultural Income Accepted – ITAT Bangalore Deletes Additions & Adhoc Disallowance
Where assessee, an agriculturist, substantiated majority of agricultural sales with records from MACOS & CAMPCO and balance sales were made locally without vouchers, Tribunal held u/s 44AA agriculturist not obliged to maintain books. Addition of ₹9.29 lakh deleted as Revenue showed no alternate income source. Further, adhoc disallowance of 25% expenses (₹13.58 lakh) held baseless when actual farm expenses were evidenced. Appeal allowed in full.
Assessee, a partner in two firms & an agriculturist owning 14 acres of arecanut plantation with minor crops, filed return declaring total income of ₹11.86 lakh & net agricultural income of ₹81.45 lakh. AO completed assessment u/s 143(3) r.w.s. 143(3A) & 143(3B), treating entire agricultural income of ₹81.45 lakh as unexplained income from undisclosed sources, thereby assessing income at ₹94.47 lakh.
Before CIT(A), Assessee produced bills & ledger accounts from Malnad Arecanut Co-operative Society (MACOS) & CAMPCO Ltd. evidencing agricultural sales. AO in remand accepted sales of ₹75.30 lakh (MACOS) & ₹2.78 lakh (CAMPCO). However, CIT(A) confirmed addition of ₹9.29 lakh on the ground that Assessee failed to produce evidence for sales in local market, and further estimated 25% of agricultural receipts as expenses, thereby disallowing ₹13.58 lakh.
